Medicaid Work Requirements Will Kill Jobs and Weaken State Economies, GW Analysis Shows

Proposed Medicaid work requirements could significantly reduce access to health coverage and trigger deep economic losses while failing to increase employment, according to a new reportfrom the Commonwealth Fundand the George Washington University Milken Institute School of Public Health. The analysis projects that up to 5.2 million adults nationwide could lose Medicaid coverage in 2026, leading to sharp reductions in federal Medicaid funding for states. These cuts would translate into as much as $59 billion in lost state gross domestic products (GDPs) and the elimination of up to 449,000 jobs across multiple industries.

"Medicaid is a powerful economic engine. When you cut it, the damage ripples out far beyond the health sector," said lead author Leighton Ku, director of the Center for Health Policy Researchand professor of health policy and management at Milken Institute SPH. "Our analysis shows that Medicaid work requirements would lead to hundreds of thousands of job losses and state economies losing billions. These cuts wouldn't promote employment-they'd do the very opposite."

The report, "How National Medicaid Work Requirements Would Lead to Large- Scale Job Losses, Harm State Economies, and Strain Budgets," provides state-by-state estimates of projected coverage losses, job reductions and declines in GDP and tax revenue across all 50 states and the District of Columbia.

"Work requirements don't increase employment-they trigger coverage losses," said Sara R. Collins, Commonwealth Fund senior scholar and vice president for health care coverage and access. "They push people out of Medicaid not because they aren't working, but because they can't navigate complex paper and reporting rules."

Medicaid work requirements would lead to millions of Americans losing their health coverage, which means states would receive less federal funding tied to enrollment. That funding loss would ripple through state economies: providers cut staff and services, vendors lose business and industries like retail, construction and food service shed jobs. As incomes fall, consumer spending declines, tax revenues drop, and public budgets come under strain.

The report comes as Congress weighs federal budget legislation that could bring major changes to Medicaid. Among the proposals under discussion are a nationwide Medicaid work requirement for adults ages 19 to 55 without dependents-who gained coverage through the Affordable Care Act's Medicaid eligibility expansion-and a reduction in the federal matching rate for the District of Columbia's Medicaid program. These proposals are part of a broader effort to reduce the federal deficit by identifying at least $880 billion in savings over the next decade, with Medicaid expected to absorb a significant share.

The analysis shows that if work requirements are implemented, the nationwide consequences could include:

• Between 4.6 million and 5.2 million adults would lose Medicaid coverage in 2026, largely due to confusing paperwork barriers rather than unwillingness to work.
• Medicaid expansion states and the District of Columbia would lose between $33 billion and $46 billion in federal funds in the first year alone, and up to $504 billion over a decade.
• Projected funding losses are estimated to eliminate between 322,000 and 449,000 jobs, including up to 206,000 in health care and over 242,000 across other industries such as retail, food service and construction.
• Combined state-level GDP could decline by $43 billion to $59 billion in 2026 due to lost spending and economic activity.
• Governments would see $3.2 billion to $4.4 billion less in tax revenue because of job and business losses, straining state budgets already under pressure.
• States that opted not to expand Medicaid, like Texas and Florida, would still experience economic spillover losses from reduced demand and supply chain disruptions. Texas alone could lose up to $564 million and as many as 3,900 jobs, even without direct cuts to its Medicaid funding.

The report also examines a separate proposal to lower the federal Medicaid matching rate for the District of Columbia from 70 percent to 50 percent. This change alone would result in a $712 million funding loss for the District and eliminate 7,300 jobs across D.C., Maryland, Virginia and neighboring states.

At this point, Congress has not revealed specific proposals to cut Medicaid spending, researchers noted. The report explored the potential impact of two proposals under discussion: 1) a nationwide Medicaid work requirement plan for adults ages 19 to 55 who are eligible under ACA eligibility expansions, and 2) a proposal to cut D.C.'s federal matching rate from 70 percent to 50 percent. Based on estimates of the federal funding that would be lost to each state under the proposals, the researchers assessed the effect of cuts in federal funding using IMPLAN, a widely used economic modelling system, to estimate state-level economic and employment losses, including reductions in state and local tax collections.

"As a physician, I've seen how essential Medicaid is for people managing chronic conditions and trying to stay healthy," said Joseph R. Betancourt, Commonwealth Fund president. "The evidence is clear. These work requirement proposals would leave millions without coverage and increase the burden on already-overstretched health providers in every state."